Miners Square Up to Government — and Each Other — in Congo

By

Andrea Hotter

Sep 15, 2010 12:14 pm GMT

What started as a well-intentioned attempt to restore the mining industry of Congo to its former glory is descending into a series of legal spats that are piling unwanted attention on the government of the African country.

When Congo, Africa’s largest cobalt producer, and the continent’s second-largest copper producer after Zambia, initiated a review of its mining licenses in June 2007, some 61 companies operating there came under scrutiny. Many of the licenses were negotiated during or shortly after a six-year war, and the government said it planned to cancel those that weren’t legal or fair.

Fast-forward three years and the review is still not complete. Not only that, but Congo’s government has been taken to international arbitration by Canada-listed First Quantum Minerals for breach of international law. An injunction application will be made within the next couple of weeks, according to company President Clive Newell.

At the center of the dispute is Kolwezi, First Quantum’s flagship project in Congo, which the government there seized last year. To make matters worse for First Quantum, rights to Kolwezi have since been acquired by subsidiaries of Eurasian Natural Resources Corporation, a FTSE-100 listed miner based with most of its operations in Kazakhstan.

Congo is sticking to its guns. To be fair, the African country suffered immensely in the 1980s and 1990s when copper prices tanked and miners downed tools. The license review was designed to make sure the same won’t happen again, should copper prices fall from their current elevated levels.

But somewhere along the way, the message seems to have become blurred.